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Major procedural safeguards introduced for competition law enforcement
Kinstellar, Kyiv, Ukraine,
Tue, Feb 12, 2019
February 2019 – On 6 February 2018, the Ukrainian parliament adopted a law (the "Law") introducing and enhancing a number of instruments to make companies less susceptible to investigations by the Antimonopoly Committee of Ukraine (the "AMC"). The most notable changes introduced by the Law include an improved leniency policy, the introduction of a settlement procedure in cartel cases, and the determination of time limits for AMC investigations.
The approved Law requires the signature of the president to take effect and will enter into force three months following its promulgation – with the exception of the provisions on cartel case settlements, which take effect in 2020.
Time limits for AMC investigations
Under currently valid legislation, the AMC’s investigation period is unlimited, and this has often resulted in endless, expensive, and inefficient investigations. The Law sets out definite time limits for AMC investigations depending on the category of the competition law violation, as set out below:
- six months: for non-compliance with a decision of the AMC, including the untimely submission of information, the submission of inaccurate information, and/or the creation of obstacles during inspections;
- one year: for failure to obtain merger clearance or non-compliance with the terms upon which merger clearance was granted;
- one year: for unfair competition;
- five years: for cartel cases; and
- two years: for cases involving all other types of competition law violations.
The time limit for an AMC investigation may be extended by six months if there is a need to receive additional information or to conduct a hearing, or in order to provide the parties to a case with the possibility to comment on the AMC's preliminary conclusions. The AMC may also postpone consideration of a case until completion of an expert report. The counting of all time limits above are re-set if a new respondent or co-respondent enters a case.
If the AMC fails to adopt a decision within the established terms, the investigation should be terminated.
The above-described changes do not apply to cases initiated before the Law enters into force.
Under the Law, respondents to an investigation may seek a reduction of fines imposed by the AMC by providing significant evidence. The first company involved in an investigation to provide such evidence is granted a 50% reduction; the second – 30%; subsequent companies – 20%.
The information on a company’s cooperation with the AMC is public. However, the AMC cannot disclose the information it obtains for any purpose other than its own cartel investigation. In addition to the AMC, a court may rely on such information when deciding on damage claims arising from a cartel infringement.
The Law introduces a settlement procedure, which offers companies shorter investigative proceedings and a 20% reduction of fines. To benefit from a settlement procedure, respondents must initiate the procedure and agree in advance to pay a fine. This must be done before the AMC has sent its preliminary conclusions to the parties to the investigation. A settlement procedure is initiated only with the consent of the AMC.
Access to information disclosed during settlement negotiations is restricted, and the AMC can disclose such information only with the consent of the parties concerned. In the course of settlement negotiations, the AMC informs the respondents of the cartel infringement under investigation, the markets affected, and the preliminary calculation of the fine to be otherwise imposed. If negotiations fail, the AMC cannot rely on the information disclosed by the respondents.
If the AMC and a respondent reach a settlement, they exchange and finalise a draft settlement agreement within 45 days. A commercial court is then asked to approve the executed agreement. After the approval, the AMC adopts its decision regarding the cartel case. Accordingly, respondents lose the right to challenge the AMC's decision, to the extent of what they consented to in the settlement agreement. Information on the terms of the settlement agreement is public.
Of note, the AMC does not prepare preliminary conclusions for cases where a respondent party reached a settlement, and such party cannot apply for a hearing regarding its case or access case materials.
Conclusion of a settlement agreement between the AMC and a respondent does not exempt the respondent from liability for damage caused by its violation to third parties.
The AMC can seek the cancellation of a settlement agreement with a commercial court if respondents do not comply with the settlement agreement. Once a settlement agreement has been cancelled, the AMC can review its decision in the cartel case.
Other procedural guarantees
In addition, the Law provides for the following amendments:
- Abolishment of penalties for failure to pay a fine, which amounted to 1.5% of the fine per day of delay.
- Recusal of AMC officials: the Law establishes a procedure for the recusal of AMC officials or other specialists (experts, translators, etc.) either at their own initiative or at the request of a party involved in a case, in particular if a conflict of interest exists in accordance with the Law of Ukraine "On the Prevention of Corruption".
- Independence of AMC officials conducting investigations: an AMC official who initiates or undertakes the investigation of a case should not participate in the adoption of the decision by the relevant AMC body that considers the case.
- Consultations in the course of an investigation: AMC officials, either at their own initiative or at the request of the parties involved in a case, may hold consultations in relation to a case.
- Access to evidence: an AMC decision cannot rely on evidence to which the parties did not have access and upon which they could not comment.